Cost of Insurance
COST OF BASIC INSURANCE
The cost of Basic insurance is shared between you and the Government. You pay two-thirds of the cost, and the Government pays one-third. Exception: The U.S. Postal Service (USPS) pays the full cost of Basic insurance for Postal employees.
Your age does not affect the cost of Basic insurance.
There is no extra cost for the extra benefit for those under age 45. There is no extra cost for Accidental Death and Dismemberment (AD&D) coverage.
The premium for Basic insurance does not change on a regular basis. The Office of Personnel Management (OPM) reviews the premiums periodically and will announce premium changes prior to their effective date. Premium changes are published in a Federal Register notice and are also sent to agencies and retirement systems. The premiums are also updated on the FEGLI website.
WITHHOLDINGS FOR BASIC INSURANCE
Amount of Withholding for Employees
Your share of the cost of Basic insurance is $0.15 biweekly for each $1,000 of your Basic Insurance Amount (BIA). This amount must be withheld from your pay for each pay period during which you are in pay status for any part of the pay period. Exception: The U.S. Postal Service (USPS) pays the full cost of Basic insurance for Postal employees.
Amount of Withholding for Annuitants and Compensationers
The "regular" premium for Basic insurance for annuitants and compensationers is the same amount as for employees; however, for annuitants it is computed on a monthly basis, and for compensationers it is computed every four weeks. Exception:
- USPS annuitants pay the same premium as other annuitants. They no longer receive the premium subsidy they received as active employees.
- USPS compensationers continue to receive the premium subsidy until they separate from service or complete 12 months in nonpay status, whichever happens first; after that, they pay the same premium as other compensationers.
If you are an annuitant, your retirement system will withhold your premium from your monthly annuity; if you are a compensationer, the Office of Workers' Compensation Programs (OWCP) will withhold your premium from your compensation. Basic withholdings for non-Postal compensationers begin as soon as you start receiving compensation, even during the first 12 months of nonpay status.
The total of the Basic premium(s) withheld from your annuity after retirement will depend on the reduction election you made at the time you retired or became insured as a compensationer. The reduction, if any, begins at age 65 or at retirement, whichever is later. Exception: If you retired or started receiving compensation before January 1, 1990, and elected 75 Percent Reduction, Basic insurance is free. See "Post-65 Reduction in the Amount of Coverage - Basic Insurance" and "Post-65 Reduction in the Amount of Coverage - Optional Insurance."
The "regular" premium for Basic insurance stops the month after you turn 65. If you elected 75 Percent Reduction, your Basic insurance is free once you are retired and reach 65.
If you elected 50 Percent Reduction or No Reduction, there is an extra premium for this higher level of coverage. The extra premium starts as soon as you retire or become insured as a compensationer and continues even after the regular premium stops at age 65.
Cost for Annuitants for Each $1,000 of Your Basic Insurance Amount
| |
75 Percent Reduction |
50 Percent Reduction |
No Reduction |
| Until the Month after Your 65th Birthday |
$0.3250 monthly |
$0.9250 monthly |
$2.1550 monthly |
| Starting the Month after Your 65th Birthday |
Free |
$0.60* monthly |
$1.83* monthly |
* The applicable withholding for 50 Percent Reduction or No Reduction will be withheld from your annuity for life (unless you cancel your coverage or change to 75 Percent Reduction).
If you retired before January 1, 1990, Basic insurance is free before and after your 65th birthday.
Withholdings are based on your Basic Insurance Amount (BIA) at the time of your retirement. If you elected 50 Percent Reduction, the withholdings do not change when the amount of insurance in force begins to reduce.
Cost for Compensationers for Each $1,000 of Your BIA
| |
75 Percent Reduction |
50 Percent Reduction |
No Reduction |
| Until the Month after Your 65th Birthday |
$0.30 every 4 weeks |
$0.86 every 4 weeks |
$1.98 every 4 weeks |
| Starting the Month after Your 65th Birthday |
Free |
$0.56 every 4 weeks* |
$1.68 every 4 weeks* |
* The applicable withholding for 50 Percent Reduction or No Reduction will be withheld from your compensation for life (unless you cancel your coverage or change to 75 Percent Reduction).
If you started receiving compensation before January 1, 1990, Basic insurance is free before and after your 65th birthday.
Withholdings are based on your BIA at the time of your continuation of insurance as a compensationer. If you elected 50 Percent Reduction, the withholdings do not change when the amount of insurance in force begins to reduce.
Example
Kim elected 50 Percent Reduction for her Basic insurance upon her retirement. Her BIA is $66,000 and her 65th birthday is 02-21-06. She will pay $61.05 ($0.9250 x 66) monthly for this coverage through February 2006. Beginning March 2006 the premium will be $39.60 ($0.60 x 66) monthly. (This will show up in her April annuity payment, which is for the month of March.) Starting on April 1, 2006, her coverage will begin reducing by 1 Percent per month and will continue to reduce until the 50 Percent Reduction is completed. She will continue to pay the monthly premium for the 50 Percent reduction for the rest of her life, unless she cancels her insurance or changes to the 75 Percent Reduction.
GOVERNMENT CONTRIBUTION FOR BASIC INSURANCE
Government Contribution
The Government's share of the cost of Basic insurance is an amount equal to one-half of your withholding (which means one-third of the total premium). (See Exception above for USPS employees.) The current government share per $1,000 is $0.0750 biweekly and $ 0.1625 monthly.
Employees
Your agency must pay the Government contribution for each pay period during which you are insured and in pay status for any part of the pay period.
The Government contribution comes from the appropriation or fund that is used for the payment of your salary. For an elected official, the contribution must come from the appropriation or fund that is available for payment of other salaries in the same office.
Annuitants and Compensationers
For annuitants, OPM pays the Government contribution. Exception: The USPS pays the Government contribution for Postal annuitants retired after December 31, 1989.
For compensationers, your agency continues to pay the Government contribution until you separate from service or complete 12 months in nonpay status, whichever happens first; after that, OPM pays the Government contribution. Exception: The USPS continues to pay the Government contribution for Postal compensationers who became insured as compensationers after December 31, 1989, even after you have separated or completed 12 months in nonpay status.
Note: The Government contribution for annuitants and compensationers is based on the "regular" premium for Basic insurance. There is no Government contribution toward the extra premium for those who elect 50 Percent Reduction or No Reduction.
The Government contribution stops the month after your 65th birthday, the same time your regular premium withholding for Basic insurance stops.
COST OF OPTIONAL INSURANCE
Payment for Optional Insurance
You pay the full cost of all Optional insurance. There is no Government contribution toward the cost of any Optional insurance.
AD&D coverage is for employees only. There is no extra cost for the AD&D coverage included under Option A.
The premiums for Optional insurance do not change on a regular basis. OPM reviews the premiums periodically and will announce premium changes prior to their effective date. Premium changes are published in a Federal Register notice and are also sent to agencies and retirement systems. The premiums are also updated on the FEGLI website.
Age Bands
The cost of Optional insurance depends on your age. Optional insurance premiums are based on five-year age bands beginning at age 35. You are considered to reach the next age band on the pay period following the pay period in which your birthday occurs.
Example
Laurence is 44 and has Basic insurance, Option A, and 2 multiples of Option B. On August 10, 2006, Laurence turned 45. He began paying the Option A and Option B premiums for the age 45-49 age bracket the pay period beginning August 20, 2006.
WITHHOLDINGS FOR OPTIONAL INSURANCE
Option A - Employees
The biweekly cost* of Option A coverage is:
| For employees under age 35 |
$0.30 |
| For employees ages 35 through 39 |
$0.40 |
| For employees ages 40 through 44 |
$0.60 |
| For employees ages 45 through 49 |
$0.90 |
| For employees ages 50 through 54 |
$1.40 |
| For employees ages 55 through 59 |
$2.70 |
| For employees ages 60 through 64 |
$6.00 |
| For employees ages 65 through 69 |
$6.00 |
| For employees ages 70 and over |
$6.00 |
This amount must be withheld from your pay for each pay period during which you are in pay status for any part of the pay period.
* These are the current rates. They may change in future years.
Option B - Employees
The biweekly cost* per $1,000 of Option B coverage is:
| For employees ages 35 and under |
$0.03 |
| For employees ages 35 through 39 |
$0.04 |
| For employees ages 40 through 44 |
$0.06 |
| For employees ages 45 through 49 |
$0.09 |
| For employees ages 50 through 54 |
$0.14 |
| For employees ages 55 through 59 |
$0.28 |
| For employees ages 60 through 64 |
$0.60 |
| For employees ages 65 through 69 |
$0.72 |
| For employees ages 70 through 74 |
$1.20 |
| For employees ages 75 through 79 |
$1.80 |
| For employees ages 80 & Over |
$2.40 |
This amount must be withheld from your pay for each pay period during which you are in pay status for any part of the pay period.
* These are the current rates. They may change in future years.
Option C - Employees
The biweekly cost* per multiple of Option C coverage is:
| For employees under age 35 |
$0.27 |
| For employees ages 35 through 39 |
$0.34 |
| For employees ages 40 through 44 |
$0.46 |
| For employees ages 45 through 49 |
$0.60 |
| For employees ages 50 through 54 |
$0.90 |
| For employees ages 55 through 59 |
$1.45 |
| For employees ages 60 through 64 |
$2.60 |
| For employees ages 65 through 69 |
$3.00 |
| For employees ages 70 through 74 |
$3.40 |
| For employees ages 75 through 79 |
$4.50 |
| For employees ages 80 and over |
$6.00 |
This amount must be withheld from your pay for each pay period during which you are insured and in pay status for any part of the pay period.
* These are the current rates. They may change in future years.
Note: Option C premiums are based on your age, not the age of any of your eligible family members.
You can use the FEGLI Calculator to calculate the cost of FEGLI coverage.
Annuitants and Compensationers
The cost of Optional insurance for annuitants and compensationers is the same as that for employees; however, for annuitants it is computed on a monthly basis, and for compensationers it is computed every four weeks. The premiums for compensationers (who are paid every four weeks) are two times the biweekly premium.
The cost continues to increase when you move to a new age band, just as it does for employees.
For Option A, withholdings stop the month after your 65th birthday, and the coverage is free.
For Options B and C, whether you continue to pay premiums in retirement/compensation after age 65 depends on the election you make regarding the amount of reduction you want when you turn 65. If you elect Full Reduction, withholdings stop the month after your 65th birthday, and the coverage is free while it is reducing. If you elect No Reduction, withholdings for your appropriate age band continue after age 65 (unless you cancel coverage or change to Full Reduction).
MISCELLANEOUS WITHHOLDING AND CONTRIBUTION PROVISIONS
Basis for Withholdings and Contributions
Withholdings (and Government contributions, when applicable) are based on the amount of insurance last in force during the pay period. Usually this is the amount of insurance you have on the last day of the pay period. However, if you die or separate during a pay period, the amount of withholding is based on the amount of insurance in force on the date of your death or separation.
The amount of withholdings and contributions for non-Postal intermittent employees must be determined at the end of each pay period.
There are no pro-rated premiums. You pay the premium for the full pay period even if you were paid for only part of that pay period.
Other Than Biweekly Pay Periods
If you are paid on a basis other than biweekly, your employing office must convert the biweekly amount to correspond to your pay periods. For Basic insurance and Option B, your agency must adjust the amount to the nearest one-tenth of 1 cent. For Options A and C, your agency must adjust the amount to the nearest cent.
Annual Pay for Other Than 52 Workweeks
If your annual pay is paid during a period shorter than 52 workweeks, the amount withheld from your pay is the amount obtained by converting the biweekly rate to an annual rate and prorating the annual rate over the number of installments of pay regularly paid during the year.
Example
Lenore has a salary of $47,500, giving her a BIA of $50,000. She is paid biweekly but works only 20 pay periods each year.
- Convert the biweekly rate to an annual rate ($0.15 x 26 pay periods = an annual rate of $3.90 per $1,000 of coverage).
- Divide the annual rate by the number of pay periods ($3.90 ÷ 20 = $0.195 per $1,000 of coverage per pay period, or $0.195 x 50 = $9.75 per pay period).
This calculation process applies to both Basic and Optional insurance. For Optional insurance, use the applicable age band rate to convert biweekly rate to an annual rate. It is used mostly for classes of employees, such as teachers, who are paid an annual pay but who usually receive their pay over a 9- or 10-month school year.
It does not apply to classes of employees who are paid at hourly, daily, or other rates, even though these rates may be derived from an annual pay rate.
Effect of a Living Benefit Election
If you elect a full living benefit, your withholding for Basic insurance and the Government contribution stop at the end of the pay period in which your living benefit election is effective.
If you elect a partial living benefit (available to employees only), your withholding for Basic insurance and the Government contribution are each reduced at the end of the pay period in which your living benefit election is effective. The new withholding and contribution amount are based on your post-election BIA. This post-election Basic Insurance Amount never changes. The post-election Basic Insurance Amount remains the same even if your salary changes.
A living benefit election has no effect on your withholdings for Optional insurance.
Example
Matthew has Basic insurance and 1 multiple of Option B. His salary is $43,879, giving him a BIA of $46,000. He elected a partial living benefit, which was effective 8/18/06; his post-election BIA is $6,000. Starting with the pay period ending 8/19/06, Matthew's withholding for Basic insurance will be based on his $6,000 post-election BIA. The withholding for his Option B coverage will still be based on $44,000, since the value of his Option B didn't change.
Concurrent Employment
The agency which pays the higher salary does the withholding and pays the Government contribution. Exception: If you are in nonpay status from one position, the agency that is still paying salary does the withholdings and pays the Government contribution.
Separation for Retirement or Compensation
No withholdings or contributions are required between the end of the pay period in which you separate and the beginning date of your annuity or compensation.
Nonpay Status
Your FEGLI coverage continues for up to 12 months when you go into nonpay status.
If you are in nonpay status for part of a pay period, premiums will be withheld from your salary. The withholdings and Government contribution for FEGLI Basic and the withholdings for optional coverage are required for the full pay period, even if you only worked for part of the pay period. FEGLI premiums are not prorated.
No payment is required when you are in nonpay status for an entire pay period. This applies to both your share and the Government contribution. Exceptions:
- If you are in nonpay status while receiving compensation, OWCP will make withholdings from your compensation. Your employing office pays the Government contribution until you separate or complete 12 months in nonpay status. Note: The U.S. Postal Service (USPS) continues to pay the full cost of Basic insurance for Postal employees during their first 12 months in nonpay status while in receipt of compensation, or until separation, if that is earlier.
- If you accept another position while you are in nonpay status, the agency that is actually paying you a salary will withhold premiums from your salary. The withholding for Basic insurance (and for Option B, if you have that coverage) is based on the combined salaries of the two positions, unless the "new" position is a temporary position (in that case the withholdings for Basic and Option B will be based on whichever salary is higher).
- There are certain nonpay situations during which you must continue to make premium payments on a direct pay basis. See "Special Nonpay Situations."
Insufficient Pay
Occasional
Deductions from pay are made according to the order of precedence set forth in the Treasury Financial Manual. After all other required deductions, if your pay for a particular pay period is not enough to cover the full withholdings for life insurance, the amount withheld must first be applied to Basic insurance. Any balance of pay remaining must then be applied to Optional insurance (first to Option B, then Option A, then Option C).
Ongoing
When your employing office expects that during the next six months or more, your regular pay (or annuity or compensation), after all other deductions, will not be enough to cover the required withholdings for your insurance, your employing office must notify you.
You may cancel or reduce other deductions that are not mandatory from your pay in order to bring the net pay up to the required amount.
If you have more than one type of Optional insurance, and your pay is not enough to cover all the premiums but is enough for the premiums of one or more of the coverages, you can reduce coverage to a point where your pay is enough to cover the withholdings.
You may also choose to pay premiums directly. If you do not choose direct payment, and you do not choose to terminate some or all of your coverage, your employing office will terminate your coverage administratively. If your pay is not sufficient for any premium withholding, all coverage will be terminated. Your employing office will terminate coverage in the following order:
- The multiples of Option C; then
- Option A; then
- The multiples of Option B; then
- Basic insurance.
Terminal Leave
A withholding is not normally made from a lump-sum payment for annual leave when you separate from Federal service. However, if the insured has an underpayment of premiums the agency can collect from the annual leave lump-sum payment.
TRANSFERRING TO A DIFFERENT PAYROLL OFFICE
Daily Proration Rule
The Daily Proration Rule applies when you transfer to a position serviced by a different payroll office at a time other than the beginning of the pay period or when the two agencies are on different pay periods. Each payroll office (gaining and losing) is responsible for withholdings and contributions for the actual time you occupied the position that it services.
Daily Rate
Compute a daily rate by multiplying the biweekly withholding and contribution rate by 26, then dividing by 364.
Biweekly withholding* x 26 ÷ 364
* For Basic, the contribution withholding must also be computed. See examples below.
Note: The denominator is always 364, even during a leap year.
Basic Insurance
For Basic insurance, the daily withholding rate is $0.0107 and the daily Government contribution rate is $0.0054 per $1,000 of coverage. The formula for determining the amount of withholdings and contributions for which losing and gaining agencies are responsible is:
Daily rate x Coverage Amount ÷ $1,000 x Days on payroll
Example
Marcia transfers to a different agency on the sixth day into a biweekly pay period. Her BIA is $54,000. The losing agency is responsible for:
Withholding: $0.0107 x $54,000 ÷ $1,000 x 5 days = $2.89
Contribution: $0.0054 x $54,000 ÷ $1,000 x 5 days = $1.46
The gaining agency is responsible for:
Withholding: $0.0107 x $54,000 ÷ $1,000 x 9 days =$5.20
Contribution: $0.0054 x $54,000 ÷ $1,000 x 9 days =$2.62
Optional Insurance
The payroll office must compute a daily rate for Optional insurance coverage, using the same formula as for Basic insurance. (See tables for the biweekly withholding rates for Option A, Option B, and Option C.)
For Option A, the formula for determining the amount of withholding is:
Daily rate x Days on payroll
The formula for determining the amount of Option B withholdings is the same as for Basic insurance:
Daily rate x Coverage Amount ÷ $1,000 x Days on payroll
For Option C, the formula for determining the amount of withholdings is:
Daily rate x Number of multiples x Days on payroll
Example
Marcia also has Option A, one multiple of Option B, and two multiples of Option C. She is 38 years old. The losing agency is responsible for withholding:
Option A: $0.0286 [$0.40 x 26 ÷ 364] x 5 days = $0.14
Option B: $0.0029 [$0.04 x 26 ÷ 364] x $52,000 ÷ $1,000 x 5 days = $0.75
Option C: $0.0243 [$0.34 x 26 ÷ 364] x 2 multiples x 5 days = $0.24
The gaining agency is responsible for withholding:
Option A: $0.0286 [$0.40 x 26 ÷ 364] x 9 days = $0.26
Option B: $0.0029 [$0.04 x 26 ÷ 364] x $52,000 ÷ $1,000 x 9 days = $1.36
Option C: $0.0243 [$0.34 x 26 ÷ 364] x 2 multiples x 9 days = $0.44
Retiring Employees
For retiring employees, your employing office's responsibility for withholdings and contributions depends on your age at the time of retirement.
Under Age 65 on the Starting Date of Annuity
If your annuity starts after the end of the pay period, your employing office will make full withholdings and contributions for the entire pay period.
If your annuity starts before the end of the pay period, your employing office will make withholdings and contributions through the day before the start of your annuity, using the Daily Proration Rule.
See the CSRS/FERS Handbook section entitled "Retirement Eligibility" for the rules governing the starting date of CSRS/FERS annuities.
Example
Nathaniel is age 60 and his annuity starts 8/3/06. The pay period begins on 7/23/06 and ends on 8/5/06. He will carry Basic and Option A into retirement. His BIA is $72,000. His employing office will make withholdings and contributions for the period from 7/23/06 through 8/2/06.
Basic withholding: $0.0107 x $72,000 ÷ $1,000 x 11 days = $8.47
Basic contribution: $0.0054 x $72,000 ÷ $1,000 x 11 days = $4.28
Option A withholding: $0.4286 ($6.00 x 26 ÷ 364) x 11 days = $4.71
Age 65 or over on the Starting Date of Annuity
Your employing office's responsibility for withholdings and contributions will depend on your post-65 election.
For Basic insurance, if you elect 75 Percent Reduction, your employing office will make withholdings and contributions through the end of the pay period in which you separate for retirement without any proration. If you elect 50 Percent Reduction or No Reduction, your employing office will prorate the Basic withholdings and contributions based on the starting date of your annuity, the same as for retiring employees under age 65.
For Option A, your employing office will make withholdings through the end of the pay period in which you separate for retirement without any proration.
For Option B and Option C, if you elect Full Reduction, your employing office will make withholdings through the end of the pay period in which you separate for retirement without any proration. If you elect No Reduction for Option B or Option C, your employing office will make withholdings based on the starting date of your annuity, the same as for retiring employees under age 65.
Example
Natalie is age 67 and has elected to carry Basic insurance into retirement with No Reduction and 3 multiples of Option B with Full Reduction. Her BIA is $68,000, and Option B coverage is $198,000 ($66,000 X 3). Her annuity started 11/1/06; the pay period began on 10/29/06 and ended on 11/11/06.
Natalie's employing office made withholdings and contributions for the period from 10/29/06 through 10/31/06 for Basic insurance. Her employing office made withholdings through the end of the pay period (11/11/06) for Option B coverage.
DIRECT PREMIUM PAYMENTS
When Your Pay Is Insufficient on an Ongoing Basis
Your employing office must give you a written notice as soon as it becomes aware that your pay (or annuity or compensation) will be insufficient to cover the required withholdings for at least six months. The notice will provide your current level of FEGLI coverage, the biweekly cost of the FEGLI coverage and the choices you can make. If your employing office cannot give you the notice directly, it must send the notice by first class mail.
You must choose either to terminate some or all of your FEGLI coverage or to continue your coverage by making direct premium payments. You must make your choice and return the completed notice to your employing office within 31 days after you receive the notice (45 days if you live overseas). When your employing office mails your notice, it is considered to be received five days after the date of the notice (19 days if you live overseas.)
Exceptions:
- This does not apply to employees in a nonpay status.
- If you have assigned your coverage, your employing office must give the notice to your assignee(s), instead of you.
Sample Notice
FEDERAL EMPLOYEES' GROUP LIFE INSURANCE (FEGLI) OPTIONS WHEN PAY IS INSUFFICIENT FOR WITHHOLDING PREMIUMS
Name of Insured Individual: _____________________________
Date: _____________________
You must respond with your election to continue within 31 days of this notice (45 days if you live overseas) or your FEGLI coverage will be terminated.
We have determined that your (salary/annuity/compensation) is not large enough for withholding FEGLI premiums and will continue to be insufficient on an ongoing basis. You are currently enrolled in Basic, Option A, and Option B.
The biweekly premium for Basic is $0.00, Option A $0.00, and Option B $0.00.
You have three choices: To terminate all of your FEGLI coverage, to terminate some of your FEGLI coverage, or to continue your FEGLI coverage by paying the premiums directly on a current basis.
TERMINATION: If you choose to terminate your coverage (or if you don't return this notice on time, and your coverage is terminated administratively), the termination will take effect at the end of the last pay period for which premiums were withheld. Your coverage will continue for an additional 31 days at no cost to you. During those 31 days, you will be eligible to convert to a nongroup policy. You have been given the information necessary for you to convert.
You may terminate all of your FEGLI coverage or just a part of it. If you terminate only a part of your coverage, the premiums for the remaining coverage will be withheld from your (salary/annuity/compensation), if it is large enough to do so. If your pay is still insufficient for the withholdings for the remaining insurance, you must make direct payments, or that remaining coverage will terminate.
When your salary again becomes sufficient for the premium withholdings, any terminated coverage will be reinstated automatically. If you converted any of your coverage, you must contact the insurance company to terminate the conversion policy or coverage will not be reinstated when your annuity/compensation again becomes sufficient for the premium withholdings.
CONTINUATION: If you choose to continue your FEGLI coverage, you must pay the premiums directly. Your check (or money order) in the amount of __________ must be made payable to ______________________. Include on the check your name, Social Security number, (CSA/CSI number), a note that the payment is for "FEGLI premium," and the (pay period/month) for which the payment is being made. Mail to: ___________________________________.
By choosing to continue your coverage and make direct premium payments, you are agreeing that if you do not make the payments, your coverage will be cancelled. If your coverage is cancelled for nonpayment, you will not have the right to convert, [and your coverage will not be reinstated if your salary eventually becomes large enough for the premium withholdings].
Please check the appropriate space(s) below, sign the notice, and return it to your employing office at ______________________________. If you have any questions, contact _________________________ at ________________
(Insert name and phone number of employing office contact).
TO BE COMPLETED BY [EMPLOYEE/ANNUITANT/COMPENSATIONER/ASSIGNEE]:
I have read this notice, and I understand my choices. I choose the following:
- _____ I choose to terminate all my FEGLI coverage. (Either . . . I understand that the coverage will be reinstated automatically when my salary becomes sufficient for withholding the premiums. Or . . . I understand that my coverage will not be reinstated when my annuity/compensation becomes sufficient for premium withholdings.)
- I choose to terminate only the following FEGLI coverage(s):
________ Option C (Show number of multiples [1-5] you want to terminate)
________ Option A
________ Option B (Show number of multiples [1-5] you want to terminate)
I understand that the premium for the coverage(s) that remain will be withheld from my pay if it is sufficient for doing so; otherwise I must pay my premiums directly on a current basis. (Either . . . I understand that the terminated coverage will be reinstated automatically when my salary becomes sufficient for withholding the premiums. Or . . . I understand that the terminated coverage will not be reinstated when my annuity/compensation becomes sufficient for premium withholdings.)
- _____ I choose to continue my FEGLI coverage by paying my premiums directly. I understand that if I do not make the payments on a current basis, my coverage will be cancelled (and will not be reinstated when my salary becomes sufficient for withholding the premiums).
__________________ (Insured's/Assignee's signature) _________(Date)
(End of Notice)
If You Choose to Terminate Coverage
You may choose to terminate some or all of your coverage. If you terminate enough coverage so that your pay is sufficient for withholding the premiums for the rest, your salary withholdings will continue. If you terminate some coverage but your pay is still not enough for the remaining withholdings, you must make direct payments for the premiums for the remaining coverage.
If you do not return the notice making a choice within the required time frame, your employing office will terminate administratively as much coverage as necessary to allow for premium withholdings. If your pay is not sufficient for any premium withholding, all coverage will be terminated. Your employing office will terminate coverage in the following order:
- The multiples of Option C; then
- Option A; then
- The multiples of Option B; then
- Basic insurance.
If you choose to terminate some or all of your FEGLI coverage, or if you do not return the notice making a choice within the time limit, your coverage will terminate retroactive to the end of the last pay period in which premiums were withheld from your pay. You will get the 31-day extension of coverage and the right to convert.
Your employing office will prepare a memo indicating the reason for the termination and attach it to the most recent Life Insurance Election (SF 2817) or open season election form in your file (or scan it, if your agency uses electronic files). Your employing office will give you the information necessary to convert your FEGLI coverage.
This termination is not considered a break in the continuous coverage needed for employees to continue FEGLI into retirement.
If You Choose to Continue Coverage
If you choose to continue your FEGLI coverage, you must agree to pay the premiums directly on a current basis. You cannot have some of the premiums withheld and make direct payment for the rest.
Your employing office will set up a system to collect the premiums.
You must make premium payments after each pay period in which you are covered, according to the schedule set by your employing office. If your employing office does not receive your payment by the due date, it will send you a notice stating that for your coverage to continue, you must make payment within 15 days (45 days if you live overseas) after you receive the notice. If you do not make any further payments, your coverage will be cancelled retroactive to the end of the pay period for which you last paid the premium.
If you were unable to make timely premium payments for reasons beyond your control, you may ask your employing office to reinstate your coverage. You must make your request in writing within 30 days from the cancellation date and must include documentation of the reasons. If your employing office grants your request, your coverage will be reinstated retroactive to the cancellation date, and you must pay premiums back to that date. If your request is denied, you may ask your employing office to reconsider its decision.
What Are the Effects of a Cancellation?
When your coverage is cancelled because you did not pay your premiums:
What Happens When My Pay Becomes Large Enough for Premium Withholdings?
If You Chose Termination
If you are an employee and you chose termination or your life insurance is terminated because you did not return the required notice, your FEGLI coverage is automatically reinstated when your salary becomes sufficient to cover the withholdings.
Your employing office must prepare a memo noting the reinstatement of your coverage and attach it to the most recent Life Insurance Election (SF 2817) or open season election form in your file (or scan it, if your agency uses electronic files). If you converted any of your coverage, you must terminate the conversion policy.
If you are insured as an annuitant or compensationer, your terminated coverage will not be reinstated when your annuity or compensation becomes sufficient to cover the withholdings.
If You Chose Direct Pay
If you are an employee who chose direct pay and made the premium payments, your employing office must start withholding premiums from your salary as soon as your pay becomes sufficient. If your employing office has contracted with another entity to handle direct premium payments, your employing office must notify that entity that premiums are again being withheld from your pay, so that your direct pay account can be closed out.
If you are insured as an annuitant or compensationer and you are making direct premium payments, you must continue to make direct premium payments, even if your annuity or compensation becomes sufficient to cover the withholdings.
If you chose direct pay but you did not make the premium payments, your employing office or retirement system will notify you. You must make the required payment within 15 days (45 days if living overseas) after receiving the notice. If you fail to make the overdue payment your coverage will be cancelled for nonpayment. The coverage remains cancelled even when your pay becomes sufficient to cover the withholdings.
REMITTANCE TO OPM
When to Remit
An employing office remits (sends) life insurance withholdings and contributions to OPM on the same date it pays its payroll.
How to Remit
The method for remitting payments and supporting accounting information to OPM is the Retirement and Insurance Transfer System (RITS).
OPM will credit the total amount reported for life insurance to the Employees' Life Insurance Fund.
ADJUSTING ERRORS
Errors in Withholdings and Contributions
Payroll offices must adjust errors in withholdings and contributions on a subsequent payroll and include the adjustments in a subsequent withholdings and contributions report.
Your employing office must ensure that your individual payroll record shows not only the regular (current) deductions as life insurance withholdings, but also the adjustments.
There are two types of errors in withholding:
- Overdeductions, in which your payroll office withholds too much money from your salary, annuity, or compensation; and
- Underdeductions, in which your payroll office does not withhold enough money.
Errors Involving Current Employees - Overdeductions
When too much money has been withheld from your pay - or when withholdings have been made when you are ineligible or have waived coverage - your payroll office must adjust the withholdings on a subsequent payroll on which your name appears. This adjustment automatically corrects any excess agency contribution.
Your payroll office must refund the overpaid premiums to you. Exception: If the overdeduction occurred because you were given erroneous coverage, the premiums will not be refunded if incontestability applies (see chapter on "Eligibility").
Errors Involving Current Employees - Underdeductions
When too little money - or no money - has been withheld from your pay, your payroll office must remit the payment to OPM no later than 60 calendar days after the date it determines the amount of the underdeduction. This payment must be made to OPM regardless of whether or when your employing office recovers the underdeduction from you. The payment is sent to OPM in the same manner as the bi-weekly premiums.
The underdeduction represents an overpayment of salary to you. You had coverage which would have been payable if you had died. Your employing office must determine whether to waive collection of the overpayment, in accordance with 5 U.S.C. 5584, as implemented by 4 CFR chapter 1, subchapter G. This provides that an employing office may waive recovery of the overpayment if, in its judgment, you are without fault and recovery would be against equity and good conscience. (If your employing office is excluded from the provisions of 5 U.S.C. 5584, it can use any applicable authority to waive the collection.)
If your employing office waives the collection of the unpaid deductions, it must make the payment, along with any applicable Government contributions, out of its own funds.
Errors Involving Separated Employees
When an adjustment in withholdings is necessary after you have separated from service, your payroll office must make the adjustment in your final pay (or payment to your beneficiary or estate).
Errors Involving Annuitants and Compensationers
The procedures are the same for annuitants and compensationers as for active employees. The payroll office that must adjust the error - and refund overdeductions and pay underdeductions - is the retirement system paying your annuity or the Office of Workers' Compensation Programs who pays your compensation.
HISTORICAL INFORMATION
Premium History
Here is a link to the FEGLI Program's premium history.
Basic Insurance Premiums for Annuitants and Compensationers
Employees who retired or started receiving workers' compensation before January 1, 1990, and who elected 75 Percent Reduction (or have 75 % Reduction by default) pay no premiums for Basic insurance.
Employees who retired or started receiving compensation before January 1, 1990, and who elected 50 Percent Reduction or No Reduction do not pay "regular" premiums for Basic insurance. However, they do pay the extra premiums for the 50 Percent or No Reduction election.
Employees who retire or start receiving compensation on or after January 1, 1990, continue to pay regular premiums for Basic insurance until age 65, regardless of what post-65 reduction election they make.
Direct Premium Payments
Direct premium payments were allowed for annuitants under the Federal Employees Retirement System (FERS) starting in January 1988. In October 1998 direct payment was extended to employees, compensationers, and all other annuitants whose salary, compensation, or annuity is too low to make withholdings.
Four-Day Rule
The "Daily Proration Rule" became effective March 1, 1997. Prior to that date, when an employee changed payroll offices within a pay period, the "Four-Day Rule" applied.
Under the Four-Day Rule, the gaining payroll office was responsible for full withholdings and contributions for the pay period when the transfer was effective before the fourth day of the pay period. When the transfer was effective during the last three days of the pay period, the losing payroll office made full withholdings and contributions for the entire pay period. If the transfer was effective at any other time, each payroll office was responsible for half of the withholdings and contributions.
Moving to a New Age Band
Prior to April 1999, when individuals had a birthday that moved them to another age band, the premiums for the new age band did not go into effect until the January following their birthday. Effective April 24, 1999, and to conform with generally accepted private industry practice, the premiums for the new age band become effective the pay period following the one in which the birthday occurs.
Judges
Public Law 106-113, enacted November 29, 1999, requires the Judiciary to pay any premium increases imposed after April 24, 1999, on behalf of Justices and judges of the United States aged 65 or over.
Certain Premiums for Postal Executives
Option A-Standard became free for Postal employees entering the Postal Career Executive Service (PCES) effective June 2, 1979.
Current Rates
The current FEGLI premiums first became effective January 1, 2005. For a history of rates and effective dates, see the Rates History on the FEGLI Homepage.
U.S. Office of Personnel Management 1900 E Street NW, Washington, DC 20415 | (202) 606-1800 | TTY (202) 606-2532